The global M2M market remains too fragmented with too many small players to be a profitable mass-market opportunity.
That, at least, is the view of Ansgar Schlautmann, a principal with management consultancy Arthur D. Little, speaking at this week’s M2M Zone Conference at the CeBIT IT tradeshow in Hannover, Germany.
Schlautmann took a downbeat view of the industry’s current performance, arguing that consolidation is needed to improve its fortunes.
“Some segments are doing better than others but M2M has not taken off,” he said. “Most of the money will be made by platform providers but there are too many players crowding into this area.”
Squeezed by competition from China, hardware companies like Cinterion and Telit are now trying to establish themselves as providers of managed services – an area in which telecoms operators and telematics companies are also highly active, notes Schlautmann.
But other analysts on the same panel struck a more optimistic tone.
“M2M has taken off,” insisted Jim Morrish, a co-founder of analyst company Machina Research. “We’ve got about 40% growth in SIMs in the past year, but yes – it is incredibly fragmented.”
Nevertheless, he adds, there are clearly opportunities for the likes of Cinterion and Telit, which are more suited than telecoms operators to managing certain bespoke applications.
Robin Duke-Woolley, the chief executive of Beecham Research, agreed that M2M was “not necessarily a telco business” and said the market had grown substantially over the past ten years, albeit from a low base.
“M2M is inevitable in most companies,” he said in expectation of continued growth as organizations look to streamline their operations and unlock new revenue opportunities.
Asked what is the most reliable measure of M2M adoption, Schlautmann said the industry should pay less attention to the number of connections and focus more on revenues.
Arthur D. Little’s forecasts in this area are not encouraging, said Schlautmann. “In Germany alone we think M2M will generate something like $4 billion in revenues in 2016, which is a relatively small market for so many players,” he said.
Morrish, however, thinks the “lowest common denominator in terms of a single global number” is connections, due to the difficulty of measuring revenues across so many different sectors.